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2014-04-08 18:41:08
Mortgages Now Could be Easier to Get for Those wit

Mortgages Now Could be Easier to Get for Those with Not-So-Good Credit

Lenders are now turning to borrowers with less-than-average credit who couldn’t even get their banker’s attention at the height of the refinancing boom a year ago.

The average rate on a 30-year fixed-rate mortgage is up about a percentage point from a year ago. However, the benchmark loan was at 4.41 percent for the week ending April 3, which is still historically low territory, according to Freddie Mac.

A year ago, the 30-year-fixed averaged 3.54 percent, close to its all-time record low of 3.31 registered in November 2012.

Despite the still very low rates by historical standards, major lenders have been forced downsize their mortgage businesses because of the sharp downturn in refinancing demand.

So now lenders are more willing to consider borrowers with less-than-perfect credit or those who don’t have a 20 percent down payment, writes Amy Hoak for MarketWatch. Supposedly, they’re also  focusing on providing better service.

“Rising rates are encouraging lenders to rethink their lending guidelines and bring in more business,” Erin Lantz, vice president of mortgages at Zillow, a real-estate website, told Hoak. “They haven’t had to do that reassessment of their guidelines [until now] because they were so busy with the refinance volume.”

These are people being courted nowadays have good, but not excellent, credit. These borrowers would have been considered quality borrowers a decade ago but were left out of the market after the housing crash.

Here’s the lowdown: For conventional mortgages backed by Freddie Mac and Fannie Mae, you might need a 620 FICO score, versus the 640 or 660 you needed last year, according to Daniel Jacobs, division president for American Financial Network, a mortgage banking firm based in Chino Hills, Calif.

For loans insured by the Federal Housing Administration, you might need a 580 FICO, while lenders required a 620 or 640 a year ago, he said.

“We have seen, from the lender side, more lender quotes for consumers who have FICO scores between 600 and 639,” Lantz said.


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